 "Samvardhana Motherson International")
Shares of Samvardhana Motherson International (SAMIL) rallied 8 per cent to hit a 52-week high of Rs 92.25 on the BSE in Wednesday’s intra-day trade after the company via its wholly owned subsidiary SMRP B.V signed a pact to acquire 81 per cent stake in Yachiyo Industry, a Honda Motor subsidiary.
The stock surpassed its previous high of Rs 91.68, touched on July 21, 2022. At 09:40 am; it was quoting 7 per cent higher at Rs 91.26 as compared to 0.04 per cent decline in the S&P BSE Sensex.
Motherson will form an 81 per cent to 19 per cent strategic partnership with Honda Motor where both partners will drive the company towards a strong and sustainable future and be fully prepared for next-generation products and technologies. The transaction emphasises Motherson’s commitment to be a globally preferred sustainable solutions provider for the automotive industry.
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Yachiyo Industry comprises of 4W and 2W businesses. As a part of the overall transaction, the 2W business (housed under Goshi Giken) will be transferred to Honda Motor before Motherson acquires 81 per cent stake in Yachiyo’s 4W business.
Yachiyo is engaged in production of automobile parts like Sunroofs, Fuel tanks and Resin products with 13 manufacturing facilities and 3 R&D centres across 8 countries with reported revenue and EBITDA of EUR 824 million (around Rs 7,500 crore) and EUR 94 million (around Rs 850 crore).
SAMIL has bought the target at an equity valuation of EUR 145 million (around Rs 1,300 crore), which the brokerage ICICI Securities believes, is inexpensive that is <0.2x P/S and ~1.5x EV/EBITDA and gels well with its mission of geography/customer/component diversification. The brokerage expects the deal to be EPS accretive for the company.
“Our positive view on Motherson remains intact based on an industry-wide recovery, execution of a strong order book for SMRPBV, receding cost inflation, and capacities in place for growth. Motherson will benefit substantially from easing supply-side issues and receding cost headwinds, leading to strong growth and balance sheet deleverage,” Motilal Oswal Financial Services said in a report.
